Australia: The 1 July 2017 employment law changes that could impact your business

The new financial year is just a few days away and whilst this
is usually an extremely busy time of the year for most businesses,
it's also prime time for employers to review their employment
framework, including the impact of increases to the minimum wage
and high-income threshold, changes made to modern awards and new
workplace laws that might affect your business.

Minimum wage

For any business that has employees that are covered by a modern
award and are paying at or close to the minimum wage under the
award, it is important to review and increase employee's
minimum wages.

On 1 July 2017, the minimum wage in all modern awards will
increase by 3.3%. Employers are required to increase the wages of
any employee receiving minimum pay under an award by this amount,
with weekly wages rounded to the nearest 10 cents.

For employees who are not covered by a modern award or
enterprise agreement, they must be paid the national minimum wage,
which as of 1 July 2017, will increase by 3.3% to $694.90 per week,
based on 38 hours (from $672.70 in 2016-17) and $18.29 per hour
(from $17.70 per hour in 2016-17).

It is crucial that businesses increase employee's pay if
they receive award wages or the national minimum wage. The Fair
Work Ombudsman, who handles complaints regarding compliance with
workplace laws and investigate if they suspect there is a breach,
have recently been taking a very firm stance against businesses
that fail to comply with minimum wages and this could result in
being ordered to back pay employees and pay significant
penalties.

High-income threshold

The high-income threshold refers to the highest salary one can
earn and still be protected from unfair dismissal. Anyone who earns
more than the high-income threshold (and is not covered by a modern
award or enterprise agreement) is not protected from unfair
dismissal, however they are still protected from other actions
relating to unlawful termination.

The high-income threshold will increase from $138,900 to
$142,000 on 1 July 2017.

Employers may wish to review the salary packages of employees
who are paid close to the high-income threshold. If they are, as of
1 July, being paid slightly less than the high income threshold, it
may be worth considering whether to increase their salary above
$142,000 in order to prevent the employee from being eligible to
make an unfair dismissal application if their employment is
terminated. When calculating whether an employee earns above the
threshold, superannuation is not included. Other entitlements such
as bonuses, provision of a mobile phone or company car are not
included if (1) they are not guaranteed to be paid and (2) if a
value has not been attributed to them in advance.

It is important to remember that employees over the high-income
threshold are still protected from adverse action and are afforded
other protections under the Fair Work Act 2009 (Cth) and other
workplace laws.

Changes to penalty rates

The Fair Work Commission issued a decision in February 2017
regarding changes to penalty rates under modern awards. The
decision highlighted the belief that Sunday and public holiday
penalty rates did not achieve the purpose of modern awards and
therefore, it was decided to reduce these rates progressively over
3 or 4 years.

On 1 July 2017, penalty rates for employees covered by the
General Retail Industry Award, the Fast Food Industry Award,
Hospitality Industry Award, Restaurant Industry Award and the
Pharmacy Award will be reduced.

General Retail Industry Award

Sunday penalty rates for full and part time employees will be
reduced from 200% to 195%

Sunday penalty rates for casual employees will be reduced from
200% to 195% (inclusive of loading)

Public holiday penalty rates for full and part time employees
will be reduced from 250% to 225%

Public holiday penalty rates for casual employees will be
reduced from 275% to 250%

Fast Food Industry Award

Sunday penalty rates for Level 1 full and part time employees
will be reduced from 150% to 145%

Sunday penalty rates for Level 1 casual employees will be
reduced from 175% to 170% (inclusive of loading)

Public holiday penalty rates for full and part time employees
will be reduced from 250% to 225%

Public holiday penalty rates for casual employees will be
reduced from 275% to 250%

Employees who work late nights on Monday to Friday will be paid
10% extra for hours between 10pm and midnight and an extra 15% for
hours between midnight and 6am

Hospitality Award

Sunday penalty rates for full and part time employees will be
reduced from 175% to 170%

Public holiday penalty rates for full and part time employees
will be reduced from 250% to 225%

Public holiday penalty rates for casual employees will be
reduced from 275% to 250%

Employees who work on Christmas Day if it falls on a weekend
and it's not declared a public holiday will be paid an extra
25% of their base rate and also get a substitute day off

Full and part time employees can agree to get 125% of their
base rate of pay for work on a public holiday instead of 225% if
they get the equivalent time added to their annual leave or take a
paid day off in the same week as the public holiday

Pharmacy Award

Sunday penalty rates for full and part time employees will be
reduced from 200% to 195%

Sunday penalty rates for casual employees will be reduced from
225% to 220% (inclusive of loading)

Public holiday penalty rates for full and part time employees
will be reduced from 250% to 225%

Public holiday penalty rates for casual employees will be
reduced from 275% to 250%

Restaurant Award

Public holiday penalty rates for full and part time employees
will be reduced from 250% to 225%

Employees who work late nights on Monday to Friday will be paid
10% extra for hours between 10pm and midnight and an extra 15% for
hours between midnight and 6am

Employees who work on Christmas Day if it falls on a weekend
and it's not declared a public holiday will be paid an extra
25% of their base rate and also get a substitute day off

Full and part time employees can agree to get 125% of their
base rate of pay for work on a public holiday instead of 225% if
they get the equivalent time added to their annual leave or take a
paid day off in the same week as the public holiday

New workplace laws

There are also two new proposed workplace laws, which
haven't yet come into effect, but are likely to in the coming
months.

The Fair Work Amendment (Protecting Vulnerable Workers) Bill
2017 aims to ensure the Fair Work Act is equipped to deal with
deliberate and persistent non-compliance, as some employers believe
they are unlikely to get caught or the penalty is too low to worry
about in the current Act. In response, this Bill seeks, amongst
other things, to increase maximum civil penalties, place greater
liability on franchisors and holding companies when they knew or
ought to have known their franchisees or subsidiaries were
non-compliant, and provide the FWO with powers to gather evidence
in line with other regulators such as the Australian Securities and
Investment Commission (ASIC).

The Fair Work Amendment (Corrupting Benefits) Bill 2017 aims to
improve governance of registered organisations. It introduces
criminal offences for giving or receiving a "corrupting
benefit" and when employers pay employee organisations or
prohibited beneficiaries' illegitimate payments or a party
receives any prohibited payment. Additionally, individuals
bargaining for enterprise agreements must disclose certain
financial benefits.

Paid parental leave

Late last year, Social Services Minister Christian Porter
announced the Coalition intended to revise the current Federal
Government's Paid Parental Leave (PPL) Scheme to prevent
"double dipping". The Coalition intended to stop
employees who received parental leave benefits from their employers
from also accessing the PPL Scheme, which provides payments at the
national minimum wage for up to 18 weeks.

However, during the announcement of the Federal Budget in May
2017, the Coalition declared they were not continuing to pursue
plans to alter the current system. As such, the PPL Scheme remains
unchanged and employees are able to access both the
government's paid parental leave scheme and their
employer's scheme, if there is one.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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Valenzuela decision highlights that employers must seriously consider any potential dismissal based on serious misconduct.

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